It’s a Lock: Arizona’s LifeLock Acquires San Diego’s ID Analytics

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LifeLock, a Tempe, AZ-based startup that offers identity theft protection services to consumers, has tied the knot with ID Analytics, a San Diego-based company that uses sophisticated computer technology to analyze consumer transactions for signs of fraud.

Financial terms of the deal were not disclosed. In a statement released yesterday, Lifelock says it raised more than $100 million in new preferred equity to complete the transaction. Lifelock also took on an additional $70 million in senior secured debut, according to U-T San Diego reporter Mike Freeman. Lifelock CEO Todd David told Freeman that not all of the debt was needed to close the deal, however.

A group of executive expatriates from San Diego’s HNC Software founded ID Analytics in 2002 to develop predictive analytics software. In the decade since it was founded, ID Analytics raised a total of $35.2 million from Trinity Ventures, Canaan Partners, Mission Ventures, and Investor Growth Capital, according to CrunchBase.

ID Analytics provides technology services to major banks, credit cards, wireless service providers, and other big companies, analyzing credit card purchases and consumer credit applications for telltale signs of fraud. The software uses pattern-recognition technology to almost instantaneously assess the likelihood that any given transaction is fraudulent by determining if it can find correlations with previously fraudulent transactions.

LifeLock plans to continue to operate ID Analytics as an independent, but wholly owned subsidiary of LifeLock. Bruce Hansen, ID Analytics’ co-founder, chairman, and CEO, will continue as the company’s CEO, and will report to LifeLock CEO Todd Davis.

LifeLock’s Davis gained fame—and notoriety—by posting his own social security number in LifeLock ads that promoted the company’s $10 monthly identity theft protection services for consumers. The company also offered a $1 million guarantee for customer losses incurred after signing up for LifeLock’s service.

The Federal Trade Commission said in 2010 that LifeLock’s claims were bogus, and levied a $12 million fine against LifeLock for deceptive business practices and for failing to secure sensitive customer data stored on its own networks. “In truth, the protection they provided left such a large hole … that you could drive that truck through it,” said FTC Chairman Jon Leibowitz.